Following a busy weekend in which the U.S. slapped 25% tariffs on Colombia for refusing to accept military planes packed with deported immigrants (and then reversed it following Colombia’s capitulation yesterday), it looks like Trump’s attention is now turning to Mexico and Canada.
According to the Wall Street Journal, the Trump administration is reportedly fast-tracking 25% tariffs for two of its top trading partners in North America. They could be applied as soon as Saturday.
Update: As of Saturday afternoon, it was confirmed that the U.S. would move to impose 25% tariffs on ALL goods imported from Mexico, with the measure set to take effect on Tuesday, February 4. This punitive action was justified, according to Trump’s spokesperson Karoline Leavitt, because of the large quantities of fentanyl and immigrants entering the U.S. from Mexico in recent years.
For its part, Mexico has been making efforts to comply with the new administration’s demands and avert a trade war — including accepting planes carrying deported immigrants and reinstating the “remain in Mexico” policy for migrants attempting to cross its northern border into the U.S. But un-named U.S. officials still insist Mexico hasn’t done enough.
Hence the growing alarm in Mexico at the prospects of a looming trade war. If the U.S. does impose punitive tariffs and Mexico retaliates (as Presidenta Sheinbaum has indicated she would do) I was curious to understand the products most vulnerable to price increases.
Below are a handful of consumer products imported into Mexico from the U.S. that could be targeted if the U.S. and Mexico enter into a trade war. All figures below are stated in billion U.S. dollars for 2023, the most recent full-year figures.
Electronic & Electrical Equipment
Mexico imported $51.6 billion in electronic equipment from the U.S. in 2023.
This includes a wide array of items used for work, play, and construction needs — including computers & computer accessories, televisions, smartphones, headphones, electrical switches, and so on.
Most of this stuff is already incredibly expensive in Mexico, with older models of popular branded computers and smartphones the most common products available when shopping at retail stores here.
If you anticipate needing any of these things soon, you’re better off buying them abroad, or secondhand.
Autos
Mexico imported $25.4 billion in autos from the U.S. in 2023.
The autos that make up these imports are mostly high-end stuff sought by rich Mexicans and expats in the country’s largest cities. Models include iconic muscle cars like the Ford Mustang and Chevrolet Corvette, Teslas, high-end SUVs like the BMW X5, Mercedes-Benz GLE, and Cadillac Escalade, as well as more mainstream trucks like the GMC Sierra and Jeep Wrangler.
As only half of Mexicans own private cars — and most of them are inexpensive, utilitarian models rather than fancy imports — I doubt that Mexico’s government officials would lose much sleep over a temporary spike in prices for imported luxury vehicles.
This is likely a category where Mexico would wield greater leverage than the U.S. in a trade war.
Meat
Mexico imported $4.8 billion in meat products from the U.S. in 2023. Pork and beef are the most common meats imported into Mexico from the U.S., with beef imports hitting a record of $1.2 billion last year.
This is another category where I believe Morena would have little reluctance to slap on new tariffs, given the states these meats are produced in are all Republican party strongholds (and close allies of the U.S. president).
If living in Mexico on a fixed income, it might be a good time to explore a more vegetarian-based diet to reduce your vulnerability to price spikes. Or start eating more locally caught fish!
Dairy Products & Eggs
Mexico now has an annual deficit of 25-30% in dairy products (domestic demand relative to domestic production) following a 50% surge in consumption of dairy products over the past 15 years.
U.S. dairy producers have helped to close this gap, exporting 919 million pounds of dry milk products and 327 million pounds of cheese to Mexico in 2023. Honey and egg products have also been imported into Mexico from the U.S. in significant quantities in recent years.
Because there are many domestic substitutes available, this is another strong candidate for new tariffs. To easily locate them, I recommend doing more of your weekly shopping at local street markets and less at supermarkets or big box stores like Costco and Walmart.
If this sounds intimidating, be sure to check out my previous article on how to shop at Mexican Tianguis (open-air street markets) like the locals do. They’re a wonderful way to buy food (and plenty more) in Mexico.
Paper Products
Mexico imported about $4.3 billion in paper products (recovered paper, pulp, paper board, etc.) from the U.S. in 2023.
Okay, I can hear what you’re thinking… who cares about paper anymore? My life revolves around a mobile phone now. Well, did you know that a lot of toilet paper used in Mexico is imported from the U.S.?
And before you dismiss this as no big deal… Have you ever tried the cheapest domestic alternatives? If you have, you’ll probably understand why many expats may still be willing to shell out for imported TP, even at inflated prices.
Cosmetics & Personal Care
A top 10 market globally for cosmetics and personal care products, Mexico imports a LOT of these items from the U.S. In 2023, exports from the U.S. in this category totaled $620 million.
Rising incomes and a preference for higher quality products in Mexico has driven rapid growth in demand for imported products from companies like L’Oreal, Estee Lauder, and Avon.
According to the U.S. Department of Commerce, his category includes makeup, skincare (moisturizers, anti-aging remedies, sunblock, etc.), hair care, shaving products, soaps, perfumes, deodorants, and so on.
To be honest, there are few domestic players in this space, and the quality is generally wanting, so I most often choose imports to avoid harsh perfumes and questionable chemicals.
Given that many of these items are premium priced and consumed disproportionately by wealthier Mexicans, I see it as another category the populist Morena party would likely target in a trade war.
No matter what happens, this is one area in which I’m unwilling to compromise my buying practices. And while European alternatives are also plentiful here in Mexico, they don’t offer consumers much relief as they’re already premium-priced.
Major Items Imported from the U.S. That Aren’t Likely Targets
Corn
Though a quintessential Mexican dietary staple, the country at some point became a net importer of corn. In fact, it was the #1 agricultural crop exported to Mexico from the U.S. last year, worth $5.4 billion.
Used to make tortillas, tamales, tortilla chips, atole, and much more, a corn shortage in Mexico would undoubtedly be seen as a food security issue of grave importance.
If a trade war erupts with the U.S., this is the LEAST likely category to be targeted by Mexico’s government given the staple’s significance to a traditional Mexican diet.
Pharmaceuticals
Generic, domestically produced substitutes are available for basic needs like cold remedies, but specialty drugs used to treat myriad chronic conditions and those still under patent protection are most likely imported.
Mexico imported $2.7 billion in U.S. pharmaceuticals in 2023, accounting for 22% of Mexico’s legal drug market. In particular, oncology drugs (to treat cancer) and vaccinations are among the more lucrative categories within this trade.
A price spike in these products could create shortages and other kinds of hardship for patients who rely on such medications — with implications for public health. In addition, bilateral trade in pharmaceuticals has seen tremendous growth since the start of the 2020 pandemic.
As such, I see it as a category the Mexican government would be unlikely to target, in the interest of both sides.
Sources: U.S. Commerce Department, U.S. Department of Agriculture, Statista, Tendata.